![]() In the area of commercial multifamily real estate, choosing a quality market is one of the most crucial first steps an investor can take. However, the work doesn’t stop there. Not all segments of a market are equal, and investors should work to find the best possible submarkets. In order to determine the quality of a submarket, investors often start by looking at crime rates within a given market. In addition to calling local precincts and using websites such as SpotCrime.com, investors can look at relative crime rates compared with the rest of a given market. Submarkets with crime rates in the top 50 percent regularly underperform in areas such as rentability, eviction rates, and rent growth. In addition, investors can assess the value of a submarket by looking at its proximity to retail, entertainment, and jobs. While it may be obvious to analyze a property’s proximity to retail destinations, it is also important to match asset quality to the quality of retail in the area. Owning a lower-grade asset in a higher-grade market can produce significant returns on investment, but the opposite situation can result in an underperforming asset.
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AuthorAn experienced real estate investor and co-founder of 37th Parallel Properties in Richmond, Virginia, Chad Doty has established himself as a leader in commercial multifamily real estate. Archives
January 2017
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